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Bitcoin “Profit Taking Completed,” Top Analyst Reveals – TradingView News
One analyst explained how profit-taking appears to be over for Bitcoin in what has been a “very healthy reset” for the market.
Bitcoin SOPR Suggests Investor Profit Taking Has Cooled
In a new post on X, analyst Willy Woo discussed the latest trend taking place in the Bitcoin Spent Output Profit Ratio (SOPR). SOPR is an on-chain indicator that basically tells us whether Bitcoin investors as a whole are selling their coins at a profit or loss at the moment.
When the value of this metric is greater than 1, it means that it can be assumed that the average holder in the sector is moving coins with some net profit currently. On the other hand, the negative indicator implies that realizing losses is the dominant mode of selling in the market.
Of course, the SOPR being exactly equal to 1 suggests that the total profits realized are exactly equal to the losses at the moment and therefore investors are just breaking even on sales.
Now, here is a chart showing the trend of Bitcoin SOPR over the past few years:
NewsBTC
As visible in the chart above, Bitcoin SOPR reached highly positive levels earlier when the cryptocurrency’s price observed its recovery towards a new all-time high (ATH).
This would suggest that investors participated in some aggressive profit taking during this run. From the chart, it is visible that such a trend was also observed at the beginning of the 2021 bull run.
With the consolidation, the asset passed from the ATH, the indicator value also suffered a cooling. As Woo highlighted in the chart, the metric has now approached the neutral mark.
It appears that two months after peak profit-taking, the appetite for potentially earnings harvesting has finally disappeared among investors. The analyst says this is a very healthy reset for cryptocurrency, especially as capital flows are once again increasing into the coin.
From the chart, it is evident that Bitcoin network flows followed a general downward trajectory at the beginning when consolidation was taking place, but recently, capital injections into the currency have increased again.
This is a similar trend to that seen earlier in the year during the crisis that followed the approval of spot exchange-traded funds (ETFs). The turnaround in capital flows at that time is what led to the rally that took the cryptocurrency to its current ATH.
BTC Price
Bitcoin suffered a pullback below $66,000 yesterday, raising concerns that the rally surge has already failed. This drop only lasted briefly as the coin returned above $67,000 today.